3 Reasons Construction Companies are Facing an Employee Retention Crisis (It’s NOT About Money)

It's often believed that competitive compensation and project notoriety ensures employee engagement. But, that’s only a fraction of what it takes to keep employees engaged. Not only engaged but passionate about doing great work for your company. The truth is a great salary doesn’t buy job fulfillment, ownership of work and high performance. Well-crafted offers are enticing at first but do not withstand the test of time. When installing employees onto mega construction projects upwards of $1 billion, companies use the sink or swim method. It weeds people out and seldom works out in the company’s favor. Making employees prove themselves without providing the support need to succeed is detrimental.

No Walk In The Park

Grand scale projects assume higher risk because of the speed of construction. Amid the chaos, there is a daily scramble to construct work safely and on time with supreme quality. Satisfying the 3rd party inspectors, Owners and Construction Managers accompanies the disarray. Employees that stick around become discouraged and dream about life outside the company. This becomes a distraction that prevents them from high performance. If they are not performing at their highest level, they are costing you more than a salary.

Employee Turnover is Costly

When they leave for your competitors, it will take a huge toll on the project. High turnover rates during the course of construction forces new employees to learn on the job with gaps in information. Anyone who has worked on a mega project knows how difficult and tricky this can be. It takes one year to be comfortable with all aspects of the project. Thus, it’s never a seamless transition. In the first degree, gaps in information lead to negative impacts such as increased Non-Conformance Reports (NCRs), rework, and schedule delays.

To The Second Degree

In the second degree, NCRs become Punchlist and Warranty items. Warranty items often stay open until the post-construction phase. This results in extra time, money and attention drained at the end of the project. NCRs can cause costly rework to ensue which increases the rate of potential injuries. When spending extra time to perform rework, resolve NCRs and rectify communication lapses, schedule delays are inevitable. Schedule delays amount to liquidated damages which can be exorbitant. For example, at LGA Airport's Redevelopment, a project I worked on for 4 years, liquidated damages for every day of delay was up to $250,000/day.

The True Cause

The bottom line is high employee turnover rates can devastatingly impact a mega construction project’s profit margin. To fix this systematic issue we must develop a deep understanding of the root cause. These three reasons are why employees jump ship on mega construction projects.

1. Lack of Appreciation & Acknowledgement

On mega construction project, everyday there is a plethora of moving parts. This makes the job of an engineer incredibly dynamic in nature. Skilled multitasking, problem solving, and time management coupled with thick skin are crucial. Very rarely does everything go according to plan. The decisions engineers make can end up saving the company tens to hundreds of thousands of dollars. They have quality good catches, optimize material handling and implement value engineering proposals to save the project time and money. The value that motivated engineers bring to the table can make or break a project. The problem is they rarely get recognized for this type of work, especially from upper management and project executives. The project tends to keep moving without stopping and acknowledging milestones or excellence put forth. Employees on projects of this nature feel unseen, unheard and underappreciated. Taking on intense stress to accomplish greatness for the project and realizing no one noticed is incredibly discouraging.

2. Poor Management & Communication

Managers in construction often climb up the ranks because of their tenure with the company. Most managers get promoted based on years of experience in the industry. Experience doesn't always equate to strong management skills. On mega projects, the stakes are too high to have managers that lack management ability. Working for a manager who struggles to motive and keep the team together deters a lot of employees from staying with a company. Over time, they lose respect for the manager and feel lost and unsupported. They feel like they aren’t being led. Managers must be trained in the art of managing themselves first, and then on leading their teams. Lack of emphasis on this leads to tears within teams and rifts in communication. A team that has poor management and communication will fail to reach its potential and experience an influx of avoidable issues costing you money. Combine that with employees leaving and the project is in real trouble.

3. No Guidance or Direction

Engineers on projects of such large scale often don’t get the attention they need to grow in their career. They often feel like there is no career path laid out for them. Engineers want to know that the upper management has a plan for them, especially younger ones. They're yearning for the skills and training to become successful managers or superintendents. Skill and training they will not gain via company online training libraries. It’s not enough. These engineers need to be guided, mentored and coached closely. They need to learn how to manage themselves and work under someone who can help them perform at their highest level.

The Bottom Line

Mega construction projects are beyond difficult as it is. Having employees run for the hills is the icing on an undesired cake. Increasing employee retention is simple yet it’s a strategy that can save the project millions of dollars. The main challenge is the implementation of a modern approach in an industry that tends to do things the old-fashioned way. However, once the door is opened, the results will speak for themselves. Your project will be among the top performing projects in the world. Focusing on process and protocols is excellent but once you focus on the people and I mean REALLY focus on the people and what makes them tick, the possibilities are endless.

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